Matching to Medicare Provider Numbers. We were unable to identify the individual hospitals receiving 12.7% of the Medicaid DSH payments. These Medicaid funds with unidentified distribution consist of the two parts:
- payments to specific hospitals for which we know some characteristics, but do not know the provider number (1.8% of the Medicaid total), and
- aggregate payments by states, for which we were not able to identify the distribution among specific hospitals (10.9% of the Medicaid total).
Throughout this report, we refer to specific hospitals with known provider numbers, and to corresponding payments, as "identified" facilities (payments). The rest of the Medicaid DSH payments (12.7%) are referred to as "unidentified". When we combine identified facilities with individual hospitals with unknown provider numbers, we call them together "specific" facilities (payments). Finally, we call state amounts for which we could not identify individual recipients "payments with unknown distribution".
New Funds for Hospitals from the Medicaid DSH Program. Nationally, we found that the States reported $15 billion in DSH payments to hospitals. Utilizing the estimates made by Coughlin et al. for FY 1997, we estimate that the funds retained by the 11 states represented 15% of federal DSH payments. Table 4.2 compares the net gains by facilities from the Medicaid DSH program across the four different assumptions regarding the extent to which the DSH payments represent "new money" to the hospitals.
- Column E shows the amounts hospitals would have received under an assumption that all DSH funds are new funds to the hospitals. The states with the largest DSH programs are California, New York, New Jersey, and Texas.
- Column F shows the amounts hospitals would have received under an assumption that only the federal share of DSH payments represents new money to facilities. It was determined by applying the federal matching rate (Column C) to the DSH payments to individual hospitals as reported by the state.7 Overall, the federal matching rate was 56.6 percent but ranged from a high of 77.1 percent in Mississippi to the 50 percent floor in eight states. A relatively higher percentage of DSH payments are assumed to be new funds in the states with relatively high federal matching rates. We use these results in our analyses examining the joint distribution of Medicare and Medicaid DSH funds
- Column G takes into account that some states may retain residual funds for their own use and assumes that only the portion of the federal share that was actually paid to hospitals represents new money. It reduces the estimate of new DSH funds in 11 states: California, Connecticut, Georgia, Indiana, Kentucky, Massachusetts, Mississippi, Missouri, North Carolina, Rhode Island, and Texas.
- Column H assumes that the federal share of DSH payments to non-state hospitals, less a pro-rata portion of the residual funds retained by the states, is new DSH funds. It affects the estimate of new DSH funds in states that pay a high proportion of their DSH funds to state institutions. Relative to Column G, this assumption reduces the estimate of new DSH funds by more than 50 percent in 13 states, including three with more than $100 million in total DSH payments: Louisiana, Indiana, and Virginia.
Medicaid DSH Distribution to Acute Care Facilities and IMDs by State. Table 4.3 shows the split of Medicaid DSH payments between acute care facilities and IMDs. The use of Medicaid DSH funds to support mental health care facilities is viewed as troubling by federal policymakers since Medicaid does not cover services in IMDs for the under age 65 population. IMDs received 23% of the total FY 1998 Medicaid DSH funds (Column E) compared to 1997, when it was equal to 21% (Coughlin, Ku and Kim, 2000). The number of states where payments to IMDs exceed 50% of the total Medicaid DSH funds also increased. In 1997, there were six such states (Florida, Illinois, Kansas, Maryland, Oregon, and South Dakota). In 1998, there were ten such states (Alaska, Delaware, Indiana, Kansas, Maryland, Michigan, North Dakota, Oregon, Pennsylvania, and South Dakota)8.
7. In some cases, we found that the sum of these federal shares in all payments made by the state exceeds state federal allotment. We considered scaling down all individual payments proportionately so that the sum is equal to the federal allotment. The assumption behind this would be that the federal matching funds never exceed the maximum limit on such payments established for all states by the federal government. However, we found that the reported amounts were consistent with the HCFA-64. We decided to rely on the HCFA-64 and make no adjustments to the reported amounts.
8. Michigan and Pennsylvania did not take part in the survey conducted by Coughlin, Ku and Kim (2000), so we do not have data on their share of IMD payments in 1997.